9864-08 Appropriating $710,000 from the Public Works Sewer General Operating Fund No. 641 to pay compromise judgement

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ORDINANCE NO. ~ ~ (° 1 ~ g AN ORDINANCE OF THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, APPROPRIATING $710,000.00 FROM THE PUBLIC WORKS SEWER GENERAL OPERATING FUND N0.641 TO PAY COMPROMISE JUDGMENT STATEMENT OF PURPOSE AND INTENT The South Bend Sewer Works was sued in a class action lawsuit by non-resident customers located within the former Clay Utilities service area. The lawsuit alleged that the City's municipal sewage utility had a duty to terminate sewer rates applicable solely to the Clay Utilities class of customers as soon as South Bend received sewer rate revenue from those customers sufficient to pay off the cost of financing acquisition of the Clay utility system. The City contended that the City had no duty to alter rates for the Clay class of customers until it adopted another rate ordinance. The St. Joseph Superior Court found in favor of the Clay Utilities customers, and on February 14, 2008 it entered judgment against the City and its sewer department in the sum of Six Hundred Fourteen Thousand Seven Hundred Twenty Five Dollars and Sixty Four Cents ($614,725.64). It reaffirmed this judgment in a separate order on May 12, 2008. Post judgment interest accrues by statute at 8% from February 14, 2008. As part of its decision the trial court denied prejudgment interest to class members which would have resulted in an additional Three Hundred Forty Thousand Dollars ($340,000.00) to class members payable by the City Wastewater Utility. Appeal of this issue by class members as well as the City's counter appeal of the underlying judgment was in progress, but the settlement of Seven Hundred Ten Thousand Dollars ($710,000.00) is a reasonable compromise of disputed issues. NOW, THEREFORE, BE TT ORDAINED BY THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA as follows: Section I. The sum of Seven Hundred Ten Thousand Dollars ($710,000.00) ~ is hereby appropriated and set aside within Sewer Works General Operating Fund No. 641 to tender to the Clerk of the. Court for settlement and release of all claims arising from the class action lawsuit brought by Clay Utilities customers of the South Bend Wastewater Utility. Section II. This Ordinance shall be in full force and effect from and after its passage by the Common. Council and approval by the Mayor. ~' Member. Sout d Common Council